John Porter seldom does things by the book, which might be handyas the industry undergoes upheaval

Feb. 9, 2014

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John Porter is a Lutheran in charge of a Catholic health system, Avera McKennan. He is a misfit of sorts who likes to ride a motorcycle without a helmet and smoke cigars, yet is fanatical about his exercise regimen. / Emily Spartz / Argus Leader

John Porter Profile

BORN: Dec. 9, 1948, Pierre. POSITION: President and CEO of Avera Health. EDUCATION: Pierre Riggs High School, 1967. University of South Dakota, 1971, political science degree, distinguished military graduate. USD law school, 1974. CAREER: Practiced law in Yankton, 1974. Hired as associate general counsel at Presentation Health system in 1978, became president and CEO for Presentation Health in 1989 and for the new Avera system in 1998. FAMILY: Wife, Penny; daughter, Valerie Kelly, 44, Pierre; son Jerime, 40, Piedmont; son Zach, 34, Sioux Falls; eight grandchildren.

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Everyone knew he was right as soon as he said it.

“The economy must not be too bad if we’re all standing in line to give someone our money,” came a voice from the rear.

It was a slow line on a busy day at Barnes & Noble, and there at the end was John Porter, president and CEO at Avera Health. He had a Bill Bryson book under his arm and was pleased to have announced to a group of strangers that a little delay at a bookstore wasn’t so bad.

John Porter has a lot on his mind these days. He has helped steer Avera through corporate restructuring and a vast expansion of services as the system’s top official the past 16 years. He is 65, with no plans to retire, and he knows, perhaps, that his hardest task still is ahead. Avera, along with Sanford across town and health systems everywhere, will have to fundamentally change the way they do business to survive. Porter calls it “the flip.” Dollars in health care always have flowed into hospitals and clinics as people in need came through the doors for help. Now, for reasons spanning politics to a new culture of wellness, the opposite must occur. Health systems must find a way to earn their money not by drawing people in, but by keeping them away.

“How does that work? It’s difficult. Those are difficult things to do,” he said.

Porter has a variety of tools to work with. One is DNA testing, just now taking off as a device letting a doctor use a patient’s genetic code to prescribe drugs and treatments that will work and avoid those that won’t. Another is e-care, a system that allows physicians in a hub city to assist patients in rural areas. Other tools could be accountability networks and new medical follow-up procedures using ipads or smartphones to monitor patients after treatment or surgery.

The devices could all reduce time, waste or travel and prevent illness. But for any of the changes to pay off, they must fit the bottom line without upsetting standards of care.

“Right now I’m not compensated to keep somebody well or healthy,” Porter said. “I’m compensated when they come in and I perform an episode of care or treatment. So we have a ‘sick care’ system.”

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That begs the question he now is considering.

“How is Avera meaningful and significant for you when you’re not sick or injured? How can we intercede and basically start to give you information, guidance, counseling on the wellness and preventive health side?”

From USD law school to health care

That Porter is the one to lead Avera into this arena is an accident of history. He grew up in Pierre, where his parents owned an office equipment store. He worked summers on road construction. He loved political science, so he went to law school at the University of South Dakota and thought his career would be in a courtroom. During high school, he met when he had called on a girl in a boarding house in Pierre, he met a different student boarder, Penny Lathem, from a ranch near Hayes, west of Pierre. They married in 1968. She became a nurse and helped him pay for law school.

For Porter, a career in hospital work was not even a consideration until he worked alongside Don Bierle, a colleague in Yankton, to provide legal counsel for the Presentation and Benedictine Catholic health systems. That was his foot in the door to reach a path to the top job at Avera, but he’s no poster child for the medical field. He doesn’t like the sight of blood. He rides a Harley without a helmet, wondering what the point would be otherwise, and he loves to smoke cigars. After a snowstorm, Porter stands in the driveway outside his brick house on the south side of Sioux Falls, shoveling snow because he likes the exercise, while puffing away on a cigar. “Yes, part of it is self-defeating,” he said.

Porter has had something else working in his favor. Those around him call it timing, judgment and listening skills.

USD president Jim Abbott, a fellow student with Porter in the 1970s, said Porter worked hard and worked smart in law school and had the good sense to marry well. Sister Joan Reichelt, executive vice president of culture at Avera, said Porter has never shown much of a temper.

Dave Timpe travels with Porter and a half-dozen other men once a year for three days of trout fishing in Montana. He sees a lighter side as they stand in their waders in the Bighorn River but also knows how Porter approaches his work. “The thing I’ve always admired about good team leaders is no matter what they’re doing, they have a good team surrounding them,” Timpe said. “The person at the head doesn’t do all the heavy lifting.”

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Porter is a detail fanatic. He has a rich, sing-song baritone voice and is apt to burst into a few bars of improvised tune if it helps make a point. He came to a recent afternoon interview in a black turtleneck and gray sport coat. He is a slender and trim man who neatly combs his gray hair straight back. He likes a 10K run or an hour on a bicycle and has a workout discipline which, but for the cigars, would make him appear a model of health.

“You’d think I’d go to the Avera fitness center because it’s one of the best ones around,” he said. “I go to Fitness 19 right down the street because I can be there in two minutes vs. driving across town. And I don’t need the whirlpools or the saunas. I go in, hop on the bike and get out of there.”

At work, he likes hard copy text in his hands when someone presents a power point onscreen. In meetings, he’s five steps ahead of the room, said Daryl Thuringer, an Avera vice president, “but if he invites you to the table, it’s because he wants to hear what you say.”

Porter also possesses a paradoxical knack to be notably unnoticeable. It’s a strange place for a man who makes $1 million a year working for a system that grosses $2 billion a year, has 13,500 employees overall and 6,000 in Sioux Falls. Part of that quality rises from his self-deprecating view of the world.

“If you run into John Porter at Hy-Vee, would you know it’s John Porter? Probably not,” said Dick Molseed, an executive vice president for Avera.

That stands in contrast to the high-profile CEO of Sanford, Kelby Krabbenhoft, one of the most recognizable personalities in town.

Porter is on several boards, but his preference for understatement keeps him with one foot in the shadows, even as he orchestrates the inner workings of an immense business. Porter shares power, said Michelle Lavallee, a former Avera executive now with Raven Industries. “Sometimes you learn more that way,” said Katherine Haberling, former executive director at the North Central Heart Institute and now an instructor at USD.

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The late Bill Janklow, South Dakota’s governor for 16 years, had an E.F. Hutton effect on conversations. When Janklow walked into a room, people stopped talking because the first thing Janklow said would be the next thing that happened. Porter is different.

“I worked for Bill Janklow. It was very much the E.F. Hutton effect,” Molseed said. “With John, he sets the tone of the debate, and then I think he very much believes the collective experience in the room is better than his one mind.”

Penny Porter said her husband lines up his next day’s clothing before bed and has his cereal ready the night before as well, so he can be up at 5 a.m. to read the newspaper and be at work before 7. When the weekend comes, he’s back in the office Saturday and Sunday to prepare for the next week. Routine is his defense against stress.

“He can step back,” she said. “He’s able to handle it more easily than I can. If he’s got something bothering him, he just goes and works it out at the gym.”

Reshaping Avera in era of expansion

Porter joined the staff at Presentation Health in 1978 and became CEO in 1989. He was an architect of change at a time hospital systems in the 1990s began expanding to include clinics, physician employees, insurance divisions, nursing homes, post-acute care, research and other specialties. Avera, a Latin word for “to be well,” came into being in the late 1990s when the Presentation and Benedictine health systems merged. The new system named Porter its CEO in 1998. Under Porter, Avera customized its own integrated model to serve a rural area from four city hubs — Sioux Falls, Yankton, Aberdeen and Mitchell. The system now touches five states and has hubs in Marshall, Minn., and Pierre. Avera was a pioneer of telemedicine, a forerunner to e-care. It strayed from the beaten path when it became a partner in a heart hospital that opened in southwestern Sioux Falls in 2001 with doctors as one-third owners. It also cut against the grain again by selling off hospitals in the Rocky Mountain region to become smaller and, Porter hoped, stronger.

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“We basically said we want to have a significant impact on a smaller footprint. ... And so we’ve become a very big fish in a quasi-small bowl,” Porter said.

Now, coming full circle, Avera is reaching back to the Rockies to serve communities through e-care, but this time as affiliates and not owners. It’s a likely pattern for the future to have a relationship without ownership. The small town clinic benefits by using the medical service of a doctor in the Sioux Falls hub. Avera benefits from the revenue and possible referral on more complex cases. The Leona M. and Harry B. Helmsley Charitable Trust has supported this model with $29 million in grants to Avera, starting in 2009. The Helmsley trust also has given $44 million to rural sites to tie in with what now is an Avera e-care network serving 90 communities.

“When we came here five years ago, we were looking for a project that was already started and was innovative that we could use to spread across the area,” said Shelley Stingley, rural health program director for the Helmsley Trust.

Only about half the 90 outlets Avera serves by e-care are Avera properties. Porter doesn’t rule out acquiring new properties, but expanding by affiliation instead of ownership has its benefits, he said. The e-hub technically could reach to Tokyo and India and anywhere with electricity. But new markets would mean new training in distant cities and would require additional licensing for doctors in Sioux Falls. Growth will be slow, Porter said.

Health reform is now center stage in politics and the economy, especially with Congress passing the Affordable Care Act in 2010. But it’s been a process running at least 25 years already.

Porter likes where that initiative is leading, He doesn’t rule out acquiring new properties, but expanding by affiliation instead of ownership has its benefits.

“So for example you go the quasi-small resort town of Afton, Wyoming,” Porter said. “That’s on the other side of Jackson Hole. You’re almost in Idaho. You come into that emergency room, there’s a red button on the wall. Literally a red button the wall. You hit that ... and you’re talking to the emergency room physician that’s right here in Sioux Falls. And so here you are dealing with sophisticated, highly trained people providing good quality services for patients in those markets. Those things I find exciting.”

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The e-hub technically could reach to Tokyo and India and anywhere with electricity. Avera is in no hurry to search out those markets, Porter said. Expansion requires training in new markets and would require doctors in Sioux Falls to secure licenses to practice there. So grow will be slow, he said.

“John Porter has developed a hospital system into a health care delivery system,” said Dave Hewett, president of the South Dakota Association of Healthcare Organizations. “Certainly, John has always been a person anticipating the next move. You’ve got primary care clinics, specialty clinics like orthopedics and cancer and heart care. You’ve got hospitals and post-acute care, home health, nursing homes and assisted living. You’ve got the physician community. Then you have to staff it and raise the capital to buy the equipment and build the buildings. He’s been at the head of all that.”

In an interview, Porter described himself as “very Lutheran,” the first Protestant to lead Avera as a Catholic health ministry with roots dating to the 1800s. Porter said Avera’s employees and its patients are about 25 percent Catholic in each case, which he estimated is a fair representation of the population. The entire system operates under Catholic teaching, notably on signature issues such as the dignity of human life. A dilemma arose this year as Avera began selling insurance plans on the federal marketplace which, under new federal law, are required to violate Catholic teaching by including coverage for artificial birth control. It’s an issue tied up in courts nationwide.

Understated leader, not an underdog system

Porter said most policy reflects Christian values that many faiths share. Among them is the nuance that the work in health ministry, for all its serious implications, still must be seasoned with humor. In that vein, it is not at all a heavy concern to him if he is relatively unknown.

“People probably know me or know of me in the right environs,” he said. His concern is the whole network and that Dr. Dave Kapaska, logically, is more visible in Sioux Falls as the top executive at Avera McKennan Hospital.

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He’s on the board for the state Chamber of Commerce, Junior Achievement and the South Dakota Community Foundation.

“So, to the extent people move in those circles, you bet. But up and down the street, no. That’s probably somewhat intentional on my part. Because I’ve always looked at myself at least in recent life as president and CEO of Avera Health. Well, Avera Health has a very strong presence in Yankton, in Aberdeen, now in Pierre, in Mitchell, Marshall, and so I don’t want to be identified as Sioux Falls. In Sioux Falls our face actually is Dr. Dave Kapaska, and before Dave it was Fred Slunecka,” he said, naming the current and past top executives at Avera McKennan Hospital.

If anything, a gap in public recognition might have grown the past seven years. Avera and Sanford, almost lockstep in many of their growth strategies and services, have found themselves in different orbits of public view. T. Denny Sanford’s three separate nine-figure gifts to the health system bearing his name have episodically put him and Krabbenhoft on the front page for major financial news. The Sanford Pentagon is in the news almost daily as the city’s newest basketball arena. The state medical school and soon-to-open city events center, though distinct from the Sanford health system, also share the banker-philanthropist’s name because of his donations.

This creates a bit of an Avis analogy, where a car rental agency, trailing Hertz in the marketplace, parlayed its underdog status into a “we try harder” ad theme in the 1960s.

“John Porter is definitely lower profile than Kelby Krabbenhoft. That’s indisputable,” said Michael Wyland, a Sioux Falls consultant who tracks the health care industry. “But decisions in health care run on three things. Can I see my doctor? Does insurance cover it? Will I be treated nicely? People assume they’re going to get high-quality care no matter where they go. Those three things in that order outpace everything else.”

Porter is unmoved by any suggestion that this makes Avera an underdog in a two-hospital town. Sanford, the city’s biggest employer, turns more revenue and employs more people than Avera in its full Upper Midwest network. But Avera enjoys prominence in South Dakota by at least two measures.

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Preliminary results showed Avera had three-fourths of South Dakota’s first signups on the health insurance exchange that opened last fall under the Affordable Care Act. The others went to Sanford and Dakotacare. Porter thinks that speaks to a trust level Avera has statewide in communities and sparsely populated areas.

Avera also had 41 percent of inpatient discharges in South Dakota in 2012, compared to 28 percent for Sanford and 21 percent for Rapid City Regional. The numbers come from Avera, which totaled up data for individual facilities from the South Dakota Association of Healthcare Organizations. A Sanford spokesman agreed the totals are correct.

Krabbenhoft, the Sanford head, has spoken previously of his respect for Porter and Avera, and reiterated that by email while traveling last week: “I think of John as a longtime friend, even in an environment in which people probably see us as oftentimes competitors. ... He’s a good man and has represented Catholic Health well.”

Porter moved from Yankton to Sioux Falls in 2007, the year of the record $400 million Sanford gift. The timing was coincidence, Porter said. Many top officers for Avera were in Sioux Falls. He was commuting 35,000 miles a year, so it made sense to be here. Avera has viewed Sanford’s announcements of mega-donations with interest, but they haven’t interfered with any Avera plans or growth, he said. The work for him always has been to think ahead and try to take care of basics he calls the blocking and tackling of health care.

The proceedings were low-key when Avera received its own record donation, the first $13.5 million from the Helmsleys in 2009. About 100 people were in the lobby of the Avera corporate office. Porter announced it was a record gift and introduced a Helmsley trustee, Walter Panzirer of Sioux Falls, standing nearby. Panzirer didn’t speak, and Porter made no mention that Panzirer is Leona Helmsley’s grandson. The celebrity moment passed without comment. “We don’t overplay things,” Stingley said.

Last fall, officials stood inside a tent for a ceremony of another sort, a groundbreaking for a $25 million upgrade at Avera’s Prince of Peace nursing home in southeastern Sioux Falls. The mayor spoke. The bishop spoke. Kapaska and others spoke, but not Porter. He stood to the side, shook hands afterward and slipped out the back.